National Company Law Appellate Tribunal
Gosu Investment And Finance Pvt Ltd & Ors vs Mr.Mihir Desai & Anr on 22 August, 2024
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NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH
NEW DELHI
COMPANY APPEAL (AT) NO.233 OF 2024
(Arising out of judgement and order dated 28.06.2024 passed by National
Company Law Tribunal, Mumbai Bench in Company Petition No.4173/MB/C-
1/2018)
In the matter of:
1. Gosu Investments & Finance Pvt Ltd,
Satsang Building, Plot No.85, Off NS Road No.1
Next to ONGC Colony Gate, JVPD Scheme
Mumbai 400049
2. Abhishek Bharat Doshi
2nd Floor,
Satsang Building, Plot No.85, Off NS Road No.1
Next to ONGC Colony Gate, JVPD Scheme
Mumbai 400049
3. Deepak Chunilal Doshi
3rd Floor
Satsang Building, Plot No.85, Off NS Road No.1
Next to ONGC Colony Gate, JVPD Scheme
Mumbai 400049
4. Shilpa Sunil Shah
4th Floor
Satsang Building, Plot No.85, Off NS Road No.1
Next to ONGC Colony Gate, JVPD Scheme
Mumbai 400049 Appellants
Vs
1. Mihir Desai
S/o Chandrakant Desai,
1st Floor,
Satsang Building, Plot No.85, Off NS Road No.1
Next to ONGC Colony Gate, JVPD Scheme
Mumbai 400049
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2. Himanshu Vajubhai Gokhani
Ground Floor,
Satsang Building, Plot No.85, Off NS Road No.1
Next to ONGC Colony Gate, JVPD Scheme
Mumbai 400049 Respondents
For appellant:Mr Bishwajit Dubey, Mr. Jayesh K Rathod and Mr. Karan
Khetani, Advocates.
For Respondent:Mr. Arun Kathpalia, Sr. Advocatge and Mr. Shikhil Suri, Sr
Advocate with Mr. Kunal Mehta and Ms Waarnika Chadha, Advocates.
Mr. Kshitij Wadhwa, Mr. Shivam Bhagwati, Ms Pranjana BH and Ms
Swarupini Srinath, Advocates.
JUDGEMENT
JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) The appeal is against an order dated 28.06.2024 passed by the Ld. National Company Law Tribunal, Mumbai. Vide the impugned order the Ld. NCLT has held that the immovable property viz. flat No.101 situated at Satsang Building, between Ville Parle and Andheri, Mumbai alongwith share certificate No.23, has been sold to Respondent No.1.
2. The facts of the case are the appellant company by way of Agreement of Lease dated 28th June, 1982 entered with one Siddiqui Hazi Oomer had purchased lease rights in an open Plot No.85 of MHADA situated at North Irla Nallah, between Vile Parle and Andheri, Mumbai. The appellant company duly applied for and received approvals of plans from BMC and had constructed a residential building on the said land.
3. It is alleged the appellant company was unable to sell its flats due to lack of permission from its lessor MHADA, therefore, it gave one flat to each 3 of its 20% shareholder members/directors merely for his/her use and occupation, until the company decides to dispose off the entire property.
4. The appellant company had five shareholders/members/directors viz.
(i) Himanshu Vajubhai Cokani (ii) Kalpana Pradeep Shah (iii) Abhishek Barat Doshi (iv) Deepak Chunilal Doshi; and (v) Shilpa Sunil Shah.
5. The crux of the argument of the learned counsel for the appellant is the shareholder of the appellant company does not have any title or ownership in the property of the appellant viz. the flat(s) occupied by each of the five shareholders and hence Ms Kalpana Shah could never had mortgaged her flat No.101 (Supra) for obtaining a loan in a company, M/s Pasad Impex (P) Ltd in which she and her husband were directors. It is argued Ms Kalpana Shah was never an owner of flat No.101 in Satsang building and was merely an occupant and user of that flat and the mortgage of flat to the Bank, as a guarantee for loan obtained by M/s Pasad Impex Pvt Ltd was wholly illegal. The learned counsel for the Respondent argued otherwise.
6. Heard.
7. Admittedly Respondent No.1 had acquired shares under share certificate No.23 and a flat viz. bearing No.101 situated at Satsang Building for valuable consideration pursuant to an enforcement proceedings initiated by the Bank under the SARFAESI Act. The said acquisition tantamounts to transmission of shares in favour of Respondent No.1 by operation of law and hence Respondent No.1 had acquired, shares and flat through valid SARFAESI proceedings.
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8. In Dinesh Nagindas Shah & Ors Vs. Pankaj Aluminium Industries Pvt Ltd 2010 SCC Online Bom 942, it was held an award passed by an Arbitrator would fall in the ambit of transmission by operation of law and such transfer would not be based upon volition of the parties but by operation of law.
9. Though it was contended by the learned counsel for the appellant no transfer of shares could have taken place without exhausting the pre-emptive rights stipulated in the Articles of Association of Respondent No.1 but admittedly, the present case is a case of transmission of shares and not of transfer of shares as shares/flat was transmitted vide sale certificate issued by New India Cooperative Bank Ltd, pursuant to an order of the competent court in SARFEASI proceedings. The provisions of SARFEASI Act shall have an over riding effect over the Articles of Association. It is well settled that Article of Association of Company are not statutory in character and cannot override the provisions of law.
10. The facts do show the appellant had sufficient knowledge of SARFEASI proceedings at relevant time. On 05.05.2015 the Bank had issued a public possession notice in a daily circulating newspaper being Free Press Journal. Pursuant to taking physical possession of the flat, the Bank issued two public notices on 27th March, 2017 and 25th April, 2017 for public auction of the flat. It is well settled publication through newspaper is an accepted form of giving notice to the public at large and at no stage the appellant intervened or took any steps to challenge the security enforcement measures taken by the Bank.
11. The facts do show Respondent No.3 rather expressed his desire to purchase the said flat but failed to give a valid offer. This is corroborated by 5 the Bank's affidavit filed in CP No.2970/2019 filed by the Appellant under Section 241/242 of the Companies Act as a counter blast to the Respondent No.1's present proceedings. A copy of the affidavit in reply of the Bank dated 14.10.2019 in CP No.2970/2019 was annexed as Annexure F. Thus the appellant are now estopped from refusing to recognise Respondent No.1's rights in the shares and possession of the flat. Pertinently pursuant to the expiry of the limitation period to challenge the Bank's SARFEASI proceedings, as a counterblast to Respondent No.1's proceedings, the Appellant filed (i) Suit No.1033 of 2019 before the Hon'ble Bombay High Court seeking declaratory injunctive reliefs and then CP No. 2970/2019 under section 241 and 242 of the Companies Act, 2013 for oppression and mismanagement but did not pursue the proceedings and had failed to secure any relief either in the Suit or in Company Petition.
12. A bare perusal of Schedule I and II of the sale deed notes the chain of documents relating to the subject flat. It shows time and again the subject flat has been sold by its initial owners/occupants namely Mr. S. Gupta to Mr. Abhishek; then to Mr. Uday V and lastly to Ms. Kalpana Pradeep Shah.
13. The facts do show Respondent No.3 also intended to purchase the subject flat property and was instrumental in filing litigation against appellant company and other concerned. The fact that the subject flat has been sold time and again, the Respondent No.3 could not have alleged the subject property belong to the appellant company and not to Ms. Kalpana Shah. Rather he and all other shareholders viz. appellants No.2 to 4 have also purchased flats in the similar manner. The facts do show five flats of the 6 company are the absolute properties of five shareholders and they have been making sale/purchase of these flats as if they were its actual owner(s). Admittedly Ms Kalpana Shah, an occupant/owner of the subject flat had never raised any objection to the proceeding being conducted under SARFEASI or before the Ld. NCLT, hence question of locus standi of other shareholders, including Respondent No.3, the appellants No.2 to 4 would also arise since they have nothing to do with Flat No.101 (Supra) and their only intention seems is to upset its sale to Respondent No.1.
14. Lastly it was also one of the argument of learned counsel for the appellant that Ld. NCLT could not have condoned the delay in filing of the Company Petition without a formal application filed. It is stated though the impugned order takes note of the submissions of the appellant that the appeal is time barred but recorded that having gone through the record perused extensive communication between the parties regarding transmission of shares...........we deem it fit to condone the delay in filing the appeal.
15. It was argued these findings of the Ld. NCLT are contrary to the record as there was no extensive communication between the parties.
16. We have perused the letters dated 8th August, 2018 and 28th August, 2018 whereby the Appellant No.1 had sought clarification and documents from Respondent No.1 which were then provided by Respondent's letter dated 23rd August 2018 and 3rd September, 2018. Instead of effecting transmission of shares, the appellant No.1 vide letter dated 19th September, 2018 sought inspection of documents despite having complete details and all documents in its possession and with a view to frustrate the rights of Respondent No.1 7 had filed the petition before the NCLT Mumbai. There is no delay in filing the present company petition by Respondent No.1. The Ld. NCLT has held the protracted correspondence at the instance of the appellant constitutes sufficient reason to condone the delay in filing of this present company petition.
17. In Akal Spring Limited & Ors V Amrex Marketing Pvt Ltd, Company Appeal (AT) No.326 of 2019, it was held the Ld. NCLT has powers to condone the delay under Section 58 of the Companies Act, 2013. Further in Sesh Nath Singh & Anr V Baidyabati Sheoraphuli coop Bank Ltd and anr Civil Appeal No.9198 of 2019, it was held a delay can be condoned by Tribunal without a formal application as Section 5 of the Limitation Act does not envisage the requirement of formal application for condoning of delay.
18. Thus there is no reason for us to interfere with the reasoned order of Ld. NCLT. There being no force in the appeal, we dismiss the same.
19. Pending applications, if any, are also closed.
(Justice Yogesh Khanna) Member (Judicial) (Mr. Ajai Das Mehrotra) Member (Technical) Dated: 22-8-2024 bm